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tv   Power Lunch  CNBC  May 23, 2013 1:00pm-2:01pm EDT

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>> boeing, i take profits here. >> what are you going to look for by the end of today. >> financials are important. they continue to be the winning place. >> that does it for us. don't forget to catch more "fast money tonight at 5:00. "power" starts right now. >> "halftime" is over. power lunch and the second half of the trading day start right now. >> a lot is happening in the markets today. many, many cross currents swirling about. you feel like you're living in the land of confusion? never fear, power is here. we have got the fed, japan p worries and more. your next move. we have it all covered in this jam packed hour. we begin with sue at the new york stock exchange. >> we do have it covered, ty. what a come back in this market. when many investors saw the
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futures this morning, many were quite alarmed. right now we're only down 10 points. the s&p 500 is last traded down to 5 and 2/3 points. the russel 2,000 is down only a point. as you can tell, they were not that fortunate. look down a full amount. the shanghai kpos it was off as wel well. we're up 19 bucks in gold. we did not see as much flow into the nine year bond. trading above the 2% mark in terms of the oil market you saw
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that reaction as well. let's talk about that here on the floor of the nyse. the volatility was something to behold. specifically with utilities, obviously, but there was a lot more to it. >> the one thing in the middle of the day that nobody expected. fairly wide audience in the dough. we do have heavy volume for the second day in a row. that is very interesting yesterday. the bank, hp doing well. health care, consumer discretionary on the flat side. we had a tough open on utilities. we had a tough open. it has had a rough month. two interest rate sensitive sectors. two utilities in particular.
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a number of trades that occurred right at the open as low as $22. the nyse has ruled they will stand. a number of trades down as low as 30. we will talk more about why that happened. home builders strong today. . the yield curve has been steepening. tyler, back to you. >> high on our agenda is the russel 200. hit a record high earlier this week and it went positive for the day. seema is covering it all. >> let's check out the nasdaq first. the market likes clarity. when you see traders trying to interpret bernanke, this is what you get. a market that is somewhat jittery. when we're seeing the nasdaq
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waiver between gains and losses. did provide an early boost of tech shares. a mixed picture. some of the semi conductor players posting gains. some of the big winners this year are from the biotech space. back to you. >> thank you so much. >> first i want to bring in john. he manages $800 billion for that firm and he manages to sleep well at night. we will find out how he does that. >> thanks. pleasure. >> let's start with this
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phenomenal run that we have had in the stock market so far. does it surprise you that we have not had a more meaningful pull back in this market? >> yeah, i mean you get 145% move in the equity index over this since 2009. you look at what happened in japan yesterday. and there has not been a correction yet. but that doesn't mean stocks still are not a place you want to put money into. are they cheap? are they expensive? no, not yet. you might have some pull back. >> where are you putting money to work. obviously you have to be fairly choosey. some of the stocks have run up so considerably. >> exactly. i think one of the things we are seeing, we are seeing this around the globe.
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you can't worry about what is going to happen today or tomorrow. you have to look at the longer term horizon. volatility has not gone away. we saw that yesterday. and you saw what happened in europe. yet someone comes out, makes a statement, affects the markets. and the markets get better. that's -- there is a lot of volatility in this market. >> when you say put risk management first, i would agree with that certainly because that's how you protect some of your profits. i'm very surprised that given the move that we have seen, that people are still putting money into bond funds. what is that telling you in your years of managing money? >> i have been in this business close to 30 years now. april you had $19 billion in flows and bond funs what a run.
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i think there are a couple of things going on. what they should be doing is looking at the other aspect of their portfolio. as bond prices begin to get more volatile there. >> let me bring in patrick kaiser folks. you heard what he just said. you described yourself as cautious short term. might my best move be to do nothing? >> many times yes.
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they are not going to realize the risk. traditional lly people think th need to go to something more expensive. i think people should be looking at the names that are perceived as risky but very cheap. the markets are up almost 17%. >> you have given me the idea go where the values still remain. maybe the companies that have not moved up as much as the market. you mentioned financials and energy. give me picks that you think might work right here right now.
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jp morgan looks very cheap. one of the cheapest bank stocks out there. looking for income. they raised their dividend 50%. again, very high quality industry leaders. what you don't want to be doing is trading down into junk at this point. >> three of the company senior executives asking to appear before a grand jury. the three executives and chief compliance officer as well as its head of trading. this is all part of an insider
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trade i trading. already nine current or former employees have been charged. as for today's news about those three officers receiving subpoenas, sac declined comment. >> can i jump in? do we know yeah or nay whether mr. cohen has received a subpoena? >> there was talk of it last week. >> larry ckudlow is in the hous. if that wasn't enough, we have danica patrick coming up ahead of her big race this weekend in
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charlotte. power lunch is back in 2. [ male announcer ] what?! investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?! go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. none of them charge annual fees and all of them offer low cost investments. e-trade. less for us. more for you. at bny mellon, our business lois investments.nts. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives.
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>> back now to the queen of breaking news this hour. mary tompson with yet another update. >> hurricane season starts on june 1 and runs through november 30th. predicting it will be an above
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normal hurricane season this year. they are predicting we would see 15 to 20 name d. so again, noaa is predicting an above average hurricane season. >> you must believe that people on the jersey shore and long island who went through so much last year are looking at the forecast very carefully and warily. the kudlow report is in the penalty box again. two minutes for high sticking. i get ahead of myself. >> we decided we would steal larry and bring him to our side. we're happy to have him on the power lunch team today. we have a couple of topics to discuss. one is the fed. you know, we had bill dudly out earlier this week and we had mr. bullard out earlier this week.
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yet at the same time when the fed minutes came out and after the bernanke testimony, the markets seemed to reassess everything. it's not going to be for many months. not june, not july, not august. maybe september if you get a whole bunch of good jobs numbers but maybe not. >> that's not on the score board. just one word of caution.
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it it's. there was no inflation. right now, i just want to say this. we don't have a roaring recovery here. the feds should stay pro growth. hopefully we get some tax reform. >> you get the perfect segue to the question that came up. i thought who would i like to talk to in light of the apple hearings earlier this week about what the corporate tax code ought to look like. and for some reason your name came to my mind. i thought maybe you might have an opinion on this. if you were designing the american corporate tax code today, from zero, what would it look like? >> well, i would get rid of all the loopholes. just get rid of them. >> that's what tim cook said.
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pay taxes. that's what i would do. make it real simple. >> if i make money it would do away with this game. all the money seems to co-eless there. tax in france. income in sing a pore. you pay tax in singapore. >> if you have 4,000 employees and you pay 2% tax, you pay 2% tax in ireland. what you don't do is bring that same money back home .
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>> there is a lot of talk in congress, okay? dave camp is talking about it. sometimes the president talks about it and other times he doesn't talk about it. here is what i hear. it is possible later this year when the debt ceiling bill comes to the floor, we're talking october, november. it could conceivably be tied to the kind of tax reform that i'm describing. it's conceivable it can be tied to the debt ceiling. >> that formula, larry, that you
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just laid out was the kemp bradley reagan formula for tax reform. >> absolutely. absolutely. and i want to tell you -- >> we got to leave it there. great to see you as always. we miss you when you're not on in night. you're in the penalty box one more time. the kudlow report will return one more night. sue? >> this was a ten-year scheme. did you feel guilty at all? >> a stunning fall from grace. >> how greedy are you? >> we caught up with a man at the center of a $350 million scheme. that story in two minutes.
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[ male announcer ] this is the pursuit of perfection. >> in court today getting grilled over alleged abuse of office during her time as chief imf. >> apparently that wasn't enough. he set up shale companies that took millions in kick backs. that ended when the feds moved in. andrea day confronts him before his june sentencing.
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>> this is a case that may have you wondering who you can trust. a story about betrayal, greed, and abuse of power. >> andrea day, cnbc. >> hi. >> how are you? >> good. >> you made $20 million legitimately. did you really feel the need to steal $25 million more? >> this is crazy. >> he had it all. money, power, and everything that comes with it. >> he was working at a successful company. >> he was the number two man, the ceo, a close friend. just one month into it. got greedy. that's when he hatched a plan
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with his friend. they would have day start a t-shirt company called south bay and sell the goods to aeropostale. they agreed to keep his name out of the deal and the cash poured in. he funneled 350 million $s in t-shirt and fleece orders. in return he got $25 million in kick backs. and this e-mail obtained exclusively by cnbc. someone questioned south bay's prices writing we could have saved approximately $300,000. he fires back with this.
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>> this was a ten-year scheme. did you feel guilty at all? >> and during those years the two friends were unstoppable. they made tons of cash, too. around $25 million and set himself up as a hollywood player, producing a bunch of films including "blue valentine". >> i know what's like to get busted. >> and here is day with the cast from another one of his films, side by side with the stars. it seemed like the perfect crime.
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>> including the south bay warehouses. the ceo julian was forced to fire him. >> what you have done is shown. >> it's broken. >> my heart is broken, too. what do i do now. okay. >> he is not feeling great, either. 14 counts of mail fraud and one count of wire fraud.
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his friend pleaded guilty to experience to bribe. >> that's exactly what investigators are doing right now. they are working to track down the $25 million he has been ordered to forfeit. we will keep you posted when we find the money. investigators are out there. >> goes to an investment seminar and the promises sound too good to be true because they are. he goes under cover for the fbi.
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>> i am looking for something out of my pocket or camera head being exposed and i wonder what the hell am i going to do if that does happen? am i going to run? am i going to get killed? so, i definitely didn't want to get caught doing what i was doing. then get connected with the greed social network during the premier. you can use the hash tag american greed chat. we showed you hp a couple of seconds ago because they had a big announcement today.
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they did very well and right now it's up 13%. bob, check it out. hiking the profit outlook. >> stablization is the key. maybe the turn around. sales are still down but it's stabilizing and that's the key. that's good enough for a lot of people right now. let's take a look at what else is going on. i think a lot of people are surprised that we have entered positive territory. now we have been moving off of the highs here. rough day for international investing. specifically on the pacific end of things. this was the hot etf of the year, up dramatically. i think the key point is this is
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all weakness in china here. that's down today. i think part of the problem with japan, china ease pmi number, that's when the japanese. >> certainly. >> it has had a fantastic year given that. >> 40%. >> then 7%, that puts it in perspective. thanks for doing that. gold was the beneficiary as stocks sold off today. >> hi, it's certainly true the sell-out we have seen definitely having an impact in the gold market as some traders seek a safe haven. add to that that gold is the currency playing.
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in terms of elsewhere, not a great day. shrinking there. worst performing commodity of the session and also impacting oil prices. back to you. >> still a little on the downside. >> we already know a great deal of focus on the markets. the picture continues to change. we're seeing the nasdaq trade in negative territory. seeing a lot of option activity. we typically see big moves in the stock right now.
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pandora shares up 2%. cirrus logic is the big loser. the analyst saying that we are increasingly concerned about the uncertainty in cirrus's business model. >> coming up, a rare interview. find out what he has to say about the health of housing right now. plus it's the power house and we traveled across america. today we traveled north from here to beautiful boston. find out how much home your money buys there right now. back in a moment.
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>> one of the interesting things was when we had the volatility earlier this morning, we did not see the rush into treasuries. we saw a little but we didn't see as much of a big move as a lot of people thought we would. the ten-year yield is still above the 2% market. the yield on the 30 year as been climbing as well. it's above the 3%. let's segue into the stock market report.
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what a whip saw. >> absolutely. >> all because of the fed? because of china? >> actually what happened was all because of the fed yesterday and then this morning it was all about japan and china. it was kind of a continuing theme. and then they looked and said wait a minute. japan was up before the chinese. these two things were not connected and they allowed the bulls to come back and regain a good deal of the ground. the dow went positive. if they close with a rally, the bulls will begin to feel invincible now. >> you and i talked about this after the show yesterday. the market kind of turned yesterday afternoon.
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what does it tell you? >> you know what? i am a little bit surprised that we have rallied back. i'm surprised that we have gone positive. my sense is that we will get weaker as we go into the afternoon. then we're more into the 1600, 1640 trading range. yesterday, you know, the news was so confusing, what did he say? he protected hichls and kept his foot on the gas. everyone panicked overnight. you saw what happened. they needed a reason to take some money off the table. they took a little bit off but in the end, the fed is not going anywhere. >> tomorrow, a little worried about tomorrow ahead of the three day weekend. >> exactly. >> tuesday. don't worry two much about three day weekends. >> that's why we love you.
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>> he has got some history behind it. >> let's go to jane and get the view from the middle of the country. what kenney just said. your reaction. there has been 11 or 12 technical reversal days like we had yesterday. >> there is one vote for the correction.
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is the smartest move to do nothing? >> we are seeing fragility to come back into the market. volumes here in the 1500 and in the treasury. right now it does feel different. let's rewind for one second. remember, ty, at 1600, that was the big level we had to get through before the unemployment. just 25 days ago. and now bam, here we are again. actually to 14. could get some vix products here. at the end of the day, i think jimmy is right. >> i was hoping there was something i could disagree with. >> vigorous agreement. thanks guys. have a great weekend if i don't see you before. picture may be worth 1,000 words but wait until you hear a few of the charming words behind this just released picture from time magazine. sit a great story and we will
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tell you to you next. plus a rare interview with the ceo of lenar. that and more when we return. >> from the bay to fen way what does your money buy you in bean town? find out when the power house heads to boston, massachusetts. next on power lunch. the ocean gets warmer. the peruvian anchovy harvest suffers.
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it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon. vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. with the innovating and the transforming
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and the revolutionizing. it's enough to make you forget that you're flying five hundred miles an hour on a chair that just became a bed. you see, we're doing some changing of our own. ah, we can talk about it later. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. >> time magazine was able to get the picture from president
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obama's prom date in high school from ohio. my prom jacket was much worse than the president's, but i did have an afro about his scale. >> there you go. thanks so much. breaking news now from london on that horrific murder of a british soldier in london yesterday. >> two further people have been arrested in relation to this case. they are a 29-year-old man -- a 29-year-old woman and a 29-year-old man both arrested in london. they are both being held in south london. two men were arrested yesterday at the scene. those two men are currently in hospital under armed guard, being treated for the wounds that they received. the implication of this is of course huge. one of the main questions
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receiving directions from another organization. the news of this arrest is to suggest that they were not acting alone. we have had today, recently, the name of the victim. now he was 25 years old from manchester, in the north of england, father of a 2-year-old son. he was attached to the barracks where it took place. back to you.
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>> there has been no clarification of this. we do know that he walked out of the barracks wearing a hoody with the logo of a very well known charity here that supports wounded servicemen called help for heroes. and it is widely believed that he was targeted as a result of the fact that he was clearly a soldier leaving the barracks. >> that's a 15% price gain from just a year ago. check out shares in the meantime. the home builder, a bright spot in today's wild trading day. up on the trade. diana has a rare interview with
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the ceo. hi. >> we spoke with stewart miller this morning and he claim there is actually still more room to grow in home prices despite this new record. he said i think if you look at affordability right now with interest rates where they are or even if they go up a bit, we are in a good place. miller says we are not in a price bubble. that other improving parts of the economy are driving home prices higher. he also says prices overcorrected on the downside. he says it feels like prices are on the move but they are just snapping back to pricing levels they should have been at.
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>> 25 square feet. lays out fairly well. it was renovated in 2005. it wasn't a full gut rehab. laundry in unit. other than that it's pretty basic. location is a plus. you know, the first time buyers and the investors are really driving this segment. >> laundry in the unit. that's a selling point. let's go to the second listing. the list price here, $1.1 million. three bedrooms, 2.5 baths. don't let the outside deter you? is that the message? >> this is a great trade up property for people. it is, you know, three plus bedrooms, 2.5 baths, private roof deck. needs a little cosmetics. would give someone an opportunity to gain some profits. >> look on the inside and you
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see a nicely appointed place. >> power house of the week. the list $2.85 million. two beds, two baths, about 2,019 square feet. there we go. tax is about 30 grand a year. tell me about that one. >> this is a perfect representation of the real luxury portion of our marketplace. if you considered new construction because the 100 plus-year-old brown stone was taken down to the brick and completely rebuilt. you are looking at about 1600. the garage parking. >> appreciate the other load. >> thank you, tyler. >> underground parking in boston? that is key. after the break, a true star of
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auto racing and of advertising. we are live with danica patrick ahead of her big weekend. that is coming up next.
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but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. ♪ [ roars ] ♪ [ roars ]
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♪ [ roars ] ♪ [ roars ] ♪ [ male announcer ] universal studios summer of survival. ♪ >> it's a big weekend for auto
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racing and auto racing fans. later in the evening, it's the coca-cola race at the charlotte speedway. welcome, danica. it's a pleasure to have you with us. >> thank you. >> put in perspective how important this race is. it has launched a lot of champions. i consider you a champion for many reasons. how important is this race overall? >> you're kind. giving me a little too much credit in nascar at this point, probably. you know, it's a huge race. other than the daytona 500, it's our biggest race of the year. longest race of the year. it's 600 miles. it makes it important to be consistent because it's a long race. we raced last weekend with the all star race. >> how do you prepare for a race
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that is that long? it's got to be pretty gruelling ru it helps that it is into the night. >> there is a lot of 500 mile races and other 500 lap races. i would have to say that it's not all that big of a deal but it is a long race. so we will have to wait until sunday night to see. >> you know, my colleague who knows much more about this business than i do, i'm a fan. >> the answer is yes. i really thought i was going to do it this year. thought about it last year.
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it was all too much at one time. it comes down to it was going to take away from my focus here in the cup car. that's the decision i made was to move full-time nascar. so the further and further away i get from full-time indy car as what i did the less and less likely i think it gets. i have so many great memories from the indy it's not never, but it gets less and less realistic. >> i said you were a champion to me for many reasons and partly is because of your role as a woman. i was looking at your basically what we would call a queue rating. you top aaron rodgers, you top a-rod. you know? talk to me about the number of women that you see trying to
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enter this sport. has your role encouraged more women to get into the sport? >> well, i definitely think there are more woman coming up through the ranks for sure. that is definitely happening. i remember going to a local go cart race years and years ago. i have been fortunate to have extremely good partners. go daddy has been really big for growing my brand and awareness. the super bowlials, that's huge. i have got really good partners that use me to benefit their business, which is smart. >> best of luck, danica, we will be watching. >> thank you. >> thank you so much for joining us. stocks are on the downside. where are the winners?
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we will have them for you after our break. bny mellon combines investment management & investment servicing,
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giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.
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>> we should be seeing interest rates move down a little bit and so far we have not. some of the winners. hp, big gain of 14%. >> street signs begins right now.
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